Fighting Fraud 101: Smart Tips for Older Investors
Even if you have never been subjected to an investment fraudster's sales pitch, you probably know someone who has. Following the legendary Willie Sutton principle, fraudsters tend to go "where the money is" — and that means targeting older Americans who are nearing or already in retirement. Fraudsters also have in their sites the millions of Baby Boomers who have been accumulating sizeable retirement nest eggs through company 401(k)s and personal accounts.
The truth is we're all at risk. Anyone with any money is bound to hear from a fraudster at some point. But you can help protect your family and friends by recognizing how investment fraudsters operate and reporting suspicious sales pitches and actual scams.
The Face of Investment Fraud
Recent research has shattered the stereotype of investment fraud victims as isolated, frail, and gullible. Do you know anyone who meets the following description?
If so, you know someone who fits the profile of an investment fraudster's prime target.
The Psychology of a Scam
We've all heard the timeless admonition "If it sounds too good to be true, it probably is" — great advice, but the trick is figuring out when "good" becomes "too good." There's no bright line. Investment fraudsters make their living by making sure the deals they tout appear both good and true.
They're masters of persuasion, tailoring their pitches to match the psychological profiles of their targets. They look for your Achilles heel by asking seemingly benign questions — about your health, family, political views, hobbies, or prior employers. Once they know which buttons to push, they'll bombard you with a flurry of influence tactics, which can leave even the savviest person in a haze. Some of the most common tactics include:
Reverse Psychology
If these tactics look familiar, it's because legitimate marketers use them, too. But one key difference is that real deals will still be there tomorrow. So always take the time to stop and think before making a decision.
Here are three key strategies you — or anyone you know who fits the profile of a potential fraud target — can use to help distinguish good offers from bad ones:
Take Your Name Off Solicitation Lists
One easy step you can take to reduce the number of sales pitches you receive is to take your name off telemarketing and junk mail lists. Here's how to cut the clutter:
Most legitimate marketing firms will honor your request. So, if you receive a solicitation after taking the steps above, you should be all the more skeptical of the offer.
If a Problem Occurs
If you believe you have been defrauded or treated unfairly by a securities professional or firm, please send us a written complaint. If you suspect that someone you know has been taken in by a scam, be sure to give us that tip. Here's how:
Online:
File a Complaint (for you)
Send a Tip (for others)
Mail or Fax:
FINRA Complaints and Tips
9509 Key West Avenue
Rockville, MD 20850
Fax: (866) 397-3290